GM to invest $370 million in car plant for Cruze, Volt

General Motors has seen the writing on the wall - with sustained fuel prices at record highs and increased concern over global warming, Americans are gradually moving away from fuel-guzzlers that had traditionally been the hallmark of the country's largest automaker. It is now making a move ( delete push )  into the smaller car and electric vehicles segment.

Chevrolet VoltOnly two months after declaring its intention to electrify the automobile market with the Chevrolet Volt by the end of this decade, General Motors declared last month that the futuristic vehicle was almost ready for testing after the successful conclusion of the design. (See: GM declares Volt ready for testing; additional electric cars in development)

Now, the company proposes to invest $370 million in a new factory in Flint, Michigan, to make components for its future releases. GM Chairman and CEO Rick Wagoner said the new plant will build a 1.4-liter four-cylinder engine that will extend the range of the Volt, and a turbocharged version that will power the Chevrolet Cruze, a new compact car to be built in Lordstown, Ohio. (See: GM to invest $500 million for new small car, Cruze)

"This will be one of the places. You will be one of the teams that help GM lead into our second century," Wagoner told workers and government officials gathered for the announcement. Production at the new plant will begin in 2010, and both cars are slated to go on sale in the same year.

Adding the plant will help GM meet its goal of doubling production of the engines by 2011 as oil at more than $3.50 per gallon this year saps demand for its large pickups and sport-utility vehicles. The largest US automaker is scrambling to increase capacity to make more cars and smaller SUVs.

''In today's world of high oil prices it is essential that we respond proactively and aggressively to supply more efficient engines,'' Wagoner said in Flint. GM has invested $2 billion in powertrain projects in the past two years, he added.